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| Today's Comments (Short Term Outlook) |
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And here we are... In spite of the GM bankruptcy, stocks roared higher giving the market yet another big start to the new trading week. The Dow picked up 221-points and the TSP stock funds gained between 2.5% and 3.5%. I don't know if you've noticed this, but the first day of the trading week has been unreal the last several weeks. Since May 1, only one Monday (or Tuesday after a Monday holiday) has not seen a major rally. I just thought I'd point this out. If the rallies were minor I wouldn't even mention it, but these have all been monster rallies of +2.4% or more.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The S&P 500 opened yesterday with a gap up, so there is now an open gap between 920 and 923. This will likely get filled sooner rather than later, but how will it react to the resistance it is facing? At one point yesterday, the S&P pushed above the 200-day moving average, although it did close just below it. 944 is a strong area of resistance as the the 200-day EMA is at 943.82, and the prior high made in January was, coincidentally, 943.85. So we saw some intraday momentum push the S&P above that level, but I believe it is going to be tough to get - and stay - above that level.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk The S&P 500 peaked in the fall of 2007, and after the 50-day moving average moved below the 200-day moving average in January of '08, the S&P has not been able make any sustained moves above the 200-day MA. The last one was in the spring of 2008 where the index made a couple of brief appearances above it, but they did not last long. Here we are again.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk This seems like a good time to bring up the old 2000-2002 bear market chart. There were several attempts at the 200-day moving average back then, with three of them peeking above the average, but it wasn't until the 50-day moving average moved back above the 200-day moving average before the "all's clear" signal came. We are not there yet.  Chart provided courtesy of www.decisionpoint.com, analysis by TSP Talk It is very tough to sit on the sidelines and miss these rallies, but you have to make your moves based on what is in front of you, and while it would have been nice to pick up the returns we have seen recently, the only question we have to ask ourselves is, what is coming next? I am considering making a change to our Longer Term allocation. This is not what I do in my own account, but rather it is an hypothetical account that we track for those who don't like to make many transfers in their accounts - maybe one or two per year. It's our best attempt at managing a semi-buy and hold account. The last time we made a "hypothetical" interfund transfer for this account, was in May of 2008, when we moved from a 100% stock position, into a 60% stock, 40% G-fund allocation. Since it is buy and hold, I don't like to move to much more than 50% into cash, but I am considering 50% or 60% this week. The hypothetical account is up 5.88% in 2009, after losing 22.5% in 2008, which wasn't bad considering the stock funds were down between 37% and 42% in '08. I'll keep you posted for anyone interested.
That's all for today. Thanks for
reading! See you back here tomorrow. |